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No Support Yet For Thai Stocks

The Thai stock market on Friday snapped the three-day losing streak that had cost it more than 20 points or 3 percent. But the Stock Exchange of Thailand is tipped to head right back to the downside on Monday, despite a slightly improving political situation.

The SET has been under siege for months on political concerns, down 25 percent - but acting Thai prime minister, Somchai Wongsawat, lifted the state of emergency in Bangkok on Sunday, 12 days after it was enforced in response to violent clashes between pro- and anti-government groups. Former Prime Minister Samak Sundaravej stepped down last week after being ordered to do so by the supreme court. A new prime minister is expected to be named within a few days.

The global forecast for the Asian markets is ominous - particularly among the financials, which are shrouded in uncertainty surrounding the fate of Lehman Brothers. Lehman could declare bankruptcy at any time, while other reports suggest that Merrill Lynch and Bank of America could be in discussions regarding a possible merger. All of the uncertainty is expected to drive the financial stocks sharply lower, dragging the rest of the markets with them.

The SET finished sharply higher on Friday, lifted by the recently battered energy and financial stocks. For the day, the index added 7.54 points or 1.17 percent to close at 654.34 after trading between 654.34 and 647.19. Volume was 1.593 billion shares worth 8.164 billion baht.

Among the gainers, energy firm PTT was up 1.67 percent, while subsidiary PTT Exploration and Production added 2.24 percent, Kasikornbank gained 1.5 percent and Siam Commercial Bank was up 2.74 percent.

The lead from Wall Street is inconclusive as stocks ended a volatile trading session mixed, with investors speculated about the fate of Lehman Brothers (LEH). Investors also had a slew of economic data to look over, providing a mixed outlook on the economy.

Lehman Brothers showed significant weakness over the past week, as lingering concerns over the strength of its balance sheet sent traders out of the stock. Lehman was even forced to report preliminary third quarter results along with a series of initiatives in keeping the investment bank solvent earlier in the week. The company reportedly could declare bankruptcy at any time.

The Department of Commerce said that retail sales unexpectedly decreased in the month of August, although the drop in sales was partly due to lower gasoline prices.

Also, the Reuters/University of Michigan released its preliminary report on consumer sentiment in the month, showing that sentiment is rebounding in September, with the recent drop in energy prices offsetting concerns about inflation. The index jumped to 73.1 in September from 63.0 in August. Economists had been expecting a more modest reading of 64.0

The major averages moved to the upside in late day trading, sending the Nasdaq and the S&P 500 above the unchanged line. While the Dow closed down 11.72 points or 0.1 percent at 11,421.99, the Nasdaq closed up 3.05 points or 0.1 percent at 2,261.27 and the S&P 500 closed up 2.64 points or 0.2 percent at 1,251.69.

Despite the mixed performance on Friday, the major averages all closed higher for the week. The Dow posted a 1.8 percent gain for the week, while the Nasdaq and the S&P 500 posted more modest weekly gains of 0.2 percent and 0.8 percent, respectively.

In corporate news, Luen Thai saw H1 net profit rise 4 percent on year, the company said over the weekend, standing at $7.04 million for the six months ended 30 June. Turnover rose 7.5 percent to $379 million, while gross margin fell from 19.4 percent to 19.2 percent and the operating margin increased from 2.5 percent to 3.9 percent. Selling and distribution expenses increased 20.1 percent or $2.4 million.

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